Change In Control Agreement - Collins & AIkman Corp. and Frank J. Preston
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (the "Agreement") is made and entered
into as of April ___, 2000, by and between COLLINS & AIKMAN CORPORATION, a
Delaware corporation (the "Company"), and FRANK J. PRESTON (the "Executive").
Statement of Purpose
The Company wishes to encourage the continued service and dedication of
Executive in the event of any actual or contemplated Change in Control (as
defined below) of the Company. The Company has determined that these objectives
are best accomplished by providing Executive with individual financial security
pursuant to the terms of this Agreement, which the Company believes are fair and
reasonable and consistent with the practices of other major corporations.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Company and Executive hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) Change in Control means and shall be deemed to have occurred
upon:
(i) the acquisition, directly or indirectly, by any
"person" (within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended) within any 12 month period
of more than 80% of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors, including, but not limited to, by merger,
consolidation or similar corporate transaction or by purchase;
excluding, however, the following ("Excluded Transactions"): (A) any
acquisition of beneficial ownership by the Company, any subsidiary of
the Company, Wasserstein Perella Partners, L.P., Blackstone Capital
Partners L.P. or an affiliate of any of the foregoing, (B) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any subsidiary of the Company, and (C) any
merger, consolidation or other form of business acquisition or
combination transaction in which, immediately after the transaction and
giving effect thereto and the issuance of securities therein, holders
of Common Stock of the Company beneficially own or are entitled to
receive equity securities of the acquiring, surviving or resulting
entity (or any parent company or other affiliate thereof) that, in the
aggregate, represent more than 20% of the combined voting power
entitled to be cast generally; or
(ii) the sale of any business, businesses or assets of the
Company in any single transaction or series of related transactions
effected within any 12-month period which, on an aggregate basis,
produced at least 80% of the consolidated net sales of the Company,
calculated by giving pro forma effect to
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such transactions, and any acquisitions effected during the relevant
period, for the fiscal year immediately preceding such transaction or,
if applicable, the first such transaction in the 12-month period in
which the transaction or series of related transactions occurred,
excluding, however, any Excluded Transaction.
(b) Change in Control Period means the period commencing three
months prior to the date of a Change in Control and ending on the first
anniversary of such date or if later, the expiration of the 45 day period
referred to in Section 1(d)(3) below.
(c) Code means the Internal Revenue Code of 1986, as amended.
(d) Constructive Termination means a termination of Executive's
employment by Executive during a Change in Control Period which is due to:
(i) the involuntary relocation of Executive to any office
or location more than fifty (50) miles from the office or location at
which Executive is then located;
(ii) a material reduction in Executive's total
compensation and benefit package; or
(iii) a significant reduction in Executive's
responsibilities, position or authority (including changes resulting
from the assignment to Executive of any duties inconsistent with his
responsibilities, position or authority in effect immediately prior to
the Change in Control Period);
provided, however, that, notwithstanding any other provision hereof, no event or
circumstance will constitute "Constructive Termination" for purposes of this
Agreement (A) if Termination For Cause exists or (B) unless (1) Executive shall
have given notice to the Company of Executive's determination of the occurrence
of such event, (2) such event constitutes one of the events specified in clauses
(i) - (iii) above, and (3) such event shall be continuing as of the end of 45
days after the giving of such notice.
(e) Date of Termination means the later of (i) the date of receipt
of the Notice of Termination by the Company or Executive, as the case may be, or
(ii) any later date specified therein (which shall be not more than thirty (30)
days after the giving of such notice).
(f) ERISA means the Employee Retirement Income Security Act of
1974, as amended.
(g) Involuntary Termination means a termination of Executive's
employment by the Company during a Change in Control Period other than a
Termination For Cause. Termination of Executive's employment during a Change in
Control Period by reason of Executive's death or disability shall not be
considered an Involuntary Termination.
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(h) Notice of Termination means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide
the basis for termination of Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the date of receipt
of such notice, specifies the termination date (which shall be not more than
thirty (30) days after the giving of such notice).
(i) Termination For Cause means a termination of Executive's
employment by the Company as a result of:
(i) Executive's fraud or misappropriation with respect to
the business of the Company or intentional damage to the property or
business of the Company or any substantial asset;
(ii) willful failure by Executive to perform his duties
and responsibilities and to carry out his authority;
(iii) willful malfeasance or misfeasance or breach of
fiduciary duty or misrepresentation to the Company or its stockholders;
(iv) willful failure to act in accordance with any
specific lawful instructions of the Chairman and CEO or a majority of
the Board of Directors of the Company; or
(v) conviction of Executive of a felony.
2. Benefits Upon Involuntary Termination or Constructive
Termination During Change in Control Period. Subject to the limitations of
Section 3, in the event of an Involuntary Termination or Constructive
Termination of Executive for which the Date of Termination is within a Change in
Control Period, the Company shall pay to Executive the following benefits in a
lump sum payment (without discounting to present value) within 30 days of the
Date of Termination:
(a) to the extent not theretofore paid, Executive's base
salary through the Date of Termination;
(b) a pro rata bonus equal to (1) Executive's target
bonus immediately preceding the Change in Control Period multiplied by
(2) a fraction, the numerator of which is the number of whole months
(rounded for portions of months) elapsed in the relevant bonus year
prior to the Date of Termination, and the denominator of which is 12;
(c) twenty-four (24) months of base salary based on the
monthly rate of base salary in effect immediately preceding the Change
in Control Period, or if greater, the rate of Base Salary in effect
immediately preceding the Date of Termination; and
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(d) Executive's target annual bonus in effect immediately
preceding the Change in Control Period multiplied by two (2).
In addition, (i) the Company shall offer Executive the opportunity to purchase
his Company automobile at its net book value as of the Date of Termination, (ii)
Executive shall be deemed to continue as an employee of the Company for 2 years
following the Date of Termination for purposes of eligibility and vesting (but
not benefit accrual), under any otherwise applicable retirement income plan or
arrangement, and (iii) Executive will be entitled to continue to participate in
all welfare benefit plans for such 2 year period or, if earlier, the period
ending on the date the Executive obtains new full-time employment. Subject to
the limitations of Section 3, the Company shall also reimburse Executive for the
cost of any continued coverage elected by Executive for himself and his eligible
dependents under the Company's group health plan(s) at the end of the welfare
benefit continuation period described in clause (iii) of the immediately
preceding sentence pursuant to Section 4980B of the Code and Section 601 et seq.
of ERISA.
3. Limitation on Benefits.
(a) General. Any benefits payable or to be provided to Executive,
whether pursuant to this Agreement or otherwise, which constitute Parachute
Payments (as defined below) shall be subject to the limitation of this Section 3
so that the benefits payable or to be provided to Executive under this
Agreement, as well as any payments or benefits provided outside of this
Agreement, shall not cause the Company to have paid an Excess Parachute Payment
(as defined below). Accordingly, anything in this Agreement to the contrary
notwithstanding, in the event that the certified public accountants regularly
employed by the Company immediately prior to a Change in Control (the
"Accounting Firm") shall determine that Executive's receipt of all Parachute
Payments would cause the Company to pay an Excess Parachute Payment, it shall
determine the Reduced Amount, and the aggregate Parachute Payments shall be
reduced to such Reduced Amount in accordance with the provisions of Section 3(c)
below.
(b) Definitions. For purposes of this Section 3:
(i) "Excess Parachute Payment" shall have the same
meaning as the term "excess parachute payment" defined in Section
280G(b)(1) of the Code;
(ii) "Parachute Payment" shall mean any payment or
distribution in the nature of compensation to or for the benefit of
Executive which is contingent on a "change" under and within the
meaning of Section 280G(b)(2)(A)(i) of the Code, whether paid or
payable pursuant to this Agreement or otherwise;
(iii) "Present Value" shall mean such value determined in
accordance with Section 280G(d)(4) of the Code; and
(iv) "Reduced Amount" shall mean the largest aggregate
amount of Parachute Payments Executive may receive without causing the
Company to have paid an Excess Parachute Payment.
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(c) Limitation. If the Accounting Firm determines that Parachute
Payments should be limited to the Reduced Amount, the Company shall promptly
give Executive notice to that effect and a copy of the detailed calculation
thereof, and Executive may then elect, in Executive's sole discretion, which and
how much of the Parachute Payments, including without limitation Parachute
Payments made outside of this Agreement, shall be eliminated or reduced (as long
as after such election the Present Value of the aggregate Parachute Payments is
equal to the Reduced Amount), and shall advise the Company in writing of such
election within 10 days of Executive's receipt of notice. If no such election is
made by Executive within such 10 day period, the Company may elect which of
Parachute Payments, including without limitation Parachute Payments made outside
of this Agreement, shall be eliminated or reduced (as long as after such
election the Present Value of the aggregate Parachute Payments is equal to the
Reduced Amount) and shall notify Executive promptly of such election. All
determinations made by the Accounting Firm under this Section 3 shall be binding
upon the Company and Executive and shall be made within 45 days immediately
following the Date of Termination. As promptly as practicable following such
determination, the Company shall pay to or distribute for the benefit of
Executive such Parachute Payments as are then due to Executive under this
Agreement.
4. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit Executive's continuing or future eligibility or participation
in any benefit, bonus, incentive or other plan provided by the Company and for
which Executive may qualify, nor shall anything herein limit or otherwise affect
such rights as Executive may have under any stock option or other agreements
with the Company. Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any plan or program of the Company
subsequent to the Date of Termination shall be payable in accordance with such
plan or program.
5. Full Settlement. The Company's obligation to make payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
Executive or other parties. In no event shall Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement. The Company
agrees to pay, to the full extent provided by law, all legal fees and expenses
which Executive may reasonably incur as a result of any contest by the Company
or others of the validity or enforceability of, or liability under, any
provision of this Agreement or as a result of any contest by Executive about the
amount of any payment pursuant to this Agreement.
6. No Duplication of Benefits. Notwithstanding anything to the
contrary herein, the lump sum payment due to Executive under Section 2 hereof
shall be reduced by the amount of cash severance or salary continuation benefits
paid to Executive pursuant to any other plan or policy of the Company or a
written employment agreement between the Company (or one of its affiliates) and
Executive, it being the intent of the parties that Executive shall not receive
post-employment benefits hereunder and under such other plan, policy or written
employment agreement.
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7. Succession. This Agreement shall inure to the benefit of and
shall be binding upon the Company and its successors and assignees, but, without
the prior written consent of Executive, this Agreement may not be assigned other
than in connection with a merger, sale, consolidation or similar transaction of
all or substantially all of the business and/or assets of the Company in which
the successor or assignee assumes (whether by operation of law or express
assumption) all obligations of the Company hereunder. The Company shall require
any successor to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place. The obligations and duties of Executive
hereunder shall be personal and not assignable otherwise than by the laws of
descent and distribution.
8. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed, construed
and interpreted in accordance with the laws of the State of Michigan.
(b) Notices. All notices and communications hereunder shall be in
writing and shall be given by hand delivery to the other party by registered or
certified mail, return receipt requested, postage prepaid, or by overnight mail,
addressed as follows:
If to Executive:
Mr. Frank J. Preston
13557 Westbrook Road
Plymouth, Michigan 48170
If to the Company:
Collins & Aikman Corporation
701 McCullough Drive
P.O. Box 32665
Charlotte, North Carolina 28232
Attention: Chairman and Chief Executive Officer
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) Validity. The invalidity or unenforceability of any provision
of this contract shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) Tax Withholding. The Company may withhold from any amounts
payable under this Agreement such federal, state and local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
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(e) Waiver. The waiver of the breach of any term or of any
condition of this Agreement shall not be deemed to constitute the waiver of any
other breach of the same or any other term or condition hereof.
(f) Entire Agreement. This instrument contains the entire
agreement of the parties relating to the subject matter hereof, and it replaces
and supersedes any prior agreements between the parties relating to said subject
matter. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
(g) No Right of Employment. Executive and the Company acknowledge
that the employment of Executive by the Company is "at will," and prior to the
date of a Change in Control, may be terminated by either Executive or the
Company at any time. Upon a termination of Executive's employment prior to the
date of a Change in Control, there shall be no further rights under this
Agreement and this Agreement shall terminate and be of no further force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE:
/s/ Frank J. Preston
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Frank J. Preston
COMPANY:
COLLINS & AIKMAN CORPORATION
By: /s/ Thomas E. Evans
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Thomas E. Evans
Chairman and Chief Executive Officer
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